Segment Reporting

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting

Note 15.     Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision-maker is our Chief Executive Officer. Our reportable segments include diagnostic and information technology-based products and services for the veterinary market, which we refer to as the Companion Animal Group (“CAG”), water quality products (“Water”) and diagnostic tests for livestock and poultry health and to ensure the quality and safety of milk and food, which we refer to as Livestock, Poultry and Dairy (“LPD”). Our Other operating segment combines and presents products for the human point-of-care medical diagnostics market with our pharmaceutical product line and our out-licensing arrangements because they do not meet the quantitative or qualitative thresholds for reportable segments.

Items that are not allocated to our operating segments are as follows: a portion of corporate support function and personnel-related expenses; certain manufacturing costs; corporate research and development expenses that do not align with one of our existing business or service categories; the difference between estimated and actual share-based compensation expense; and certain foreign currency exchange gains and losses. These amounts are shown under the caption “Unallocated Amounts.”

We estimate our share-based compensation expense, corporate support function expenses and certain personnel-related costs and allocate the estimated expenses to the operating segments. This allocation differs from actual expense and consequently yields a difference that is reported under the caption “Unallocated Amounts.” 

With respect to manufacturing costs, the costs reported in our operating segments include our standard cost for products sold and any variances from standard cost for products purchased or manufactured within the period. We capitalize these variances for inventory on hand at the end of the period to record inventory in accordance with U.S. GAAP. We then record these variances as cost of product revenue as that inventory is sold. The impact to cost of product revenue resulting from this variance capitalization and subsequent recognition is reported within the caption “Unallocated Amounts.”

Additionally, in certain geographies where we maintain inventories in currencies other than the U.S. dollar, the product costs reported in our operating segments include our standard cost for products sold, which is stated at the budgeted currency exchange rate from the beginning of the fiscal year. In these geographies, the variances from standard cost for products sold related to changes in currency exchange rates are reported within the caption “Unallocated Amounts.”

The following is a summary of segment performance for the three and nine months ended September 30, 2014 and 2013(in thousands):

	For the Three Months Ended September 30,
		CAG	Water		LPD		Other		Unallocated Amounts		Consolidated Total
2014
Revenue	$	320,724	$	25,747	$	29,648	$	7,404	$	-	$	383,523
Income (loss) from operations	$	62,608	$	11,367	$	3,886	$	794	$	(6,466)	$	72,189
Interest expense, net												(3,981)
Income before provision for income taxes												68,208
Provision for income taxes												16,045
Net income												52,163
Less: Net income attributable to noncontrolling interest												21
Net income attributable to IDEXX  Laboratories, Inc. stockholders											$	52,142
2013
Revenue	$	283,843	$	23,247	$	25,131	$	6,076	$	-	$	338,297
Income from operations	$	52,711	$	10,414	$	1,125	$	612	$	623	$	65,485
Interest expense, net												(1,007)
Income before provision for income taxes												64,478
Provision for income taxes												18,786
Net income												45,692
Less: Net income attributable to noncontrolling interest												4
Net income attributable to IDEXX  Laboratories, Inc. stockholders											$	45,688

	For the Nine Months Ended September 30,
		CAG	Water		LPD		Other		Unallocated Amounts		Consolidated Total
2014
Revenue	$	949,009	$	71,655	$	93,738	$	19,446	$	-	$	1,133,848
Income (loss) from operations	$	188,820	$	29,547	$	17,669	$	1,134	$	(11,716)	$	225,454
Interest expense, net												(8,761)
Income before provision for income taxes												216,693
Provision for income taxes												60,693
Net income												156,000
Less: Net income attributable to noncontrolling interest												55
Net income attributable to IDEXX  Laboratories, Inc. stockholders											$	155,945
2013
Revenue	$	856,617	$	66,297	$	81,448	$	18,623	$	-	$	1,022,985
Income (loss) from operations	$	167,377	$	28,682	$	9,176	$	1,888	$	(1,689)	$	205,434
Interest expense, net												(2,132)
Income before provision for income taxes												203,302
Provision for income taxes												58,745
Net income												144,557
Less: Net income attributable to noncontrolling interest												15
Net income attributable to IDEXX  Laboratories, Inc. stockholders											$	144,542

The following is a summary of revenue by product and service category for the three and nine months ended September 30, 2014 and 2013  (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
		2014		2013		2014		2013
CAG segment revenue:
CAG Diagnostics recurring revenue:	$	277,957	$	242,163	$	818,327	$	734,989
IDEXX VetLab® consumables		90,971		76,080		264,405		230,637
VetLab service and accessories		13,716		12,749		40,332		37,312
Rapid assay products		46,777		43,042		139,329		133,182
Reference laboratory diagnostic and consulting services		126,493		110,292		374,261		333,858
CAG Diagnostics capital - instruments		18,040		19,115		55,508		55,702
Customer information management and digital imaging systems		24,727		22,565		75,174		65,926
CAG segment revenue		320,724		283,843		949,009		856,617
Water segment revenue		25,747		23,247		71,655		66,297
LPD segment revenue		29,648		25,131		93,738		81,448
Other segment revenue		7,404		6,076		19,446		18,623
Total revenue	$	383,523	$	338,297	$	1,133,848	$	1,022,985